Will PG&E (PCG) Stock Continue To Decline On Wednesday?

NEW YORK (TheStreet) -- Shares of PG&E Corp.  (PCG) closed down 1.92% to 42.37 on Tuesday. 

The company was charged on Tuesday with federal felony counts involving safety violations linked to a deadly 2010 natural gas pipeline explosion in the San Francisco Bay Area, the Associated Press reports.

 The AP said the indictment charges the utility with 12 felony violations of federal pipeline safety laws, which could carry a total possible fine of $6 million, or more if the court decides it somehow benefited financially from the disaster.

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TheStreet Ratings team rates PG&E CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate PG&E CORP (PCG) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • PCG's revenue growth has slightly outpaced the industry average of 2.9%. Since the same quarter one year prior, revenues slightly increased by 3.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Multi-Utilities industry. The net income increased by 1100.0% when compared to the same quarter one year prior, rising from -$9.00 million to $90.00 million.
  • PG&E CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PG&E CORP reported lower earnings of $1.84 versus $1.91 in the prior year. This year, the market expects an improvement in earnings ($3.03 versus $1.84).
  • Even though the current debt-to-equity ratio is 1.01, it is still below the industry average, suggesting that this level of debt is acceptable within the Multi-Utilities industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.42 is very low and demonstrates very weak liquidity.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Multi-Utilities industry and the overall market, PG&E CORP's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: PCG Ratings Report

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